Taking A Look At Starbucks

Submitted By Rosey-Webber
Words: 630
Pages: 3
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In 2007, Starbucks saw a significant decrease in visits to its stores, resulting in a subsequent 50% decrease in stock prices. In the previous three years, despite falling revenues and decreased visits, the chain was continuing to expand. The American mortgage crisis and subsequent depression had a significant impact on discretionary spending. Most Americans would consider coffee, especially the expensive drinks at Starbucks, as unnecessary. During a time where the economy had basically tanked, the purchase of such unnecessary items declined greatly. This came after the unfortunate timing of another price hike of $.09 at the end of 2007, which was just the last in a long run of gradual price hikes. There is no arguing that Starbucks grew at an astronomical rate since its entrance into the retail coffee market in the 1980’s. Between 1992 and 2007, the amount of store hiked from roughly 300 to 25,000 locations, a growth that no other company has paralleled to date. There were many factors that contributed to the successful growth of this enterprise. In later years, their first and foremost market strength was brand recognition. Few people have never heard of Starbucks, and their brand is recognized and appreciated on a worldwide level. Their brand consistency was a factor in their brand recognition; a store in Seattle is guaranteed to look just like a store in Virginia; offering not only the same products but the same atmosphere as well. That very atmosphere was also another reason why Starbucks enjoyed such success. The relaxed atmosphere, paired with free Wi-Fi, helped ensure that customers would return not only to enjoy good coffee but to enjoy the relaxing environment as well. The establishment of Starbucks was also the establishment of a coffee house culture. Another factor that helped their success was the general perception of Starbucks being an environmentally friendly and globally responsible enterprise. Their commitment to purchasing fair trade certified coffee espoused their strong ethical values, which carried over into their treatment of the environment and their employees. When faced with their economic challenges on the eve of what would become the worse recession in decades, Starbucks decided to stay with their recently raised prices. IN a effort to combat the reduction of discretionary spending, they could have easily lowered their prices, even if merely by a margin, to at least show good faith toward a struggling economy. With the ingredients for a cup of coffee totally between $.10 and $.50 per cup,
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